Archive for the ‘S’pore Inc’ Category

Below is an extract from a FT report in late January on the sterling performance of Pinoyland. And the low price of oil means that it’s likely to do better. So gd that “The Philippines’ economic resurgence, driven by domestic demand and economic reforms, has led to renewed interest from Singapore as well as Singapore-based companies,” said Singapore’s Minister for Trade and Industry Lim Hng Kiang. “As the Philippine economy continues to grow, demand for consumer goods and infrastructure development in sectors such as transportation and housing will rise in tandem.”* (CNA 4 th February)

Yet the Pinoy PMETs still prefer to come here. Tells us a lot doesn’t it?

The Philippines has defied regional trends by recording a pick-up in growth in the fourth quarter, as a bounce in government spending gave a fresh boost to one of Asia’s fastest-growing economies.

The Southeast Asian country grew at an annualised pace of 6.9 per cent in the final three months of the year, far ahead of the 6 per cent expected by most analysts. The quarter-on-quarter figure of 2.5 per cent was the highest in almost two decades, according …. Barclays.

A rebound in government spending was a key driver of the higher growth rate. Exports also proved strong, with manufacturing growing 10.7 per cent year on year, while the agricultural sector also performed above expectations.

The Philippines has been among the brightest economic stars in Asia since … 2010. Although the annual growth figure of 6.1 per cent is the lowest since 2011, the economy remains one of the fastest-growing in the world.

The acceleration in growth last quarter contrasts with a slowdown in many regional economies, including India, Indonesia and China.

Investors have given the Philippines a clear endorsement in both the bond and equity markets this year. The Manila index briefly rose above 7,700 points for the first time on Thursday, having clocked up a string of record highs in recent days.

This month the Philippines became the year’s first sovereign issuer in the US dollar bond market, selling $2bn of 30-year debt while paying a record low yield. Unlike Indonesia, all three major international rating agencies now regard the Philippines as investment-grade.

Investor demand has helped make the peso the best-performing currency in Asia in the past three months, during which time it has risen 1.5 per cent against the dollar. No other currency in the region has strengthened against the dollar over that period.

The Asian Development Bank expects the Philippine economy to grow 6.4 per cent this year, the highest in the region after China.

However, some analysts say lower oil prices and the unexpected uptick shown in the latest data suggest the economy may grow even faster.

Research from Capital Economics highlights the country as the world’s biggest beneficiary of the lower crude price.

“The outlook for the rest of the economy is promising. Consumer spending should remain strong on the back of falling oil prices, which will boost consumers’ purchasing power,” … Capital Economics

——

*More: Bilateral trade between the Philippines and Singapore hit S$15 billion last year – a 2-per cent increase from 2013. For the Philippines, Singapore is its fourth largest trading partner worldwide and top trading partner in ASEAN.

…

IE Singapore said there is great potential for Singapore companies to partner both the Philippine government and private sector, especially in developing infrastructure.

Under the Public-Private Partnership Programme introduced by the Philippine government in 2010, several projects have been successfully tendered by Singapore firms such as SMRT and MSI Global.

IE Singapore also said local firms are starting to explore opportunities beyond the capital city Manila into regions such as Cebu and Clark.

“Singapore at the moment is our second largest investor in investment projects. It’s also the third largest in terms of direct portfolio investments,” said Mr Guillermo Luchangco, the Philippine co-chair of the Philippines-Singapore Business Council. “We do have a very active investment incentive programme. Depending on the type of industry you bring in, it can get a lot of tax incentives and there is ease of bringing in people.”

The Philippines also has one of the highest household consumption expenditure in ASEAN, with a population of 96 million people. This offers considerable opportunities in consumer sectors, across the F&B, fashion and retail categories.

Here’s a possible reason from the letters page of the PAP’s bible, the Economist:

State-owned failings

* SIR – No long analysis is needed to understand why state-owned firms underperform (“State capitalism in the dock”, November 22nd). Two main mechanisms exist for accountability in modern society: market pressure and political control. State-owned firms fall between the two. They lack the degree of competition that private firms typically face but also do not have the direct political control that applies in conventional government.

Lack of accountability means lack of performance. Effectiveness is best secured by either keeping ventures with classic government agencies, instead of with state-owned firms, or by placing ventures in fully privatised companies with full market exposure, whichever best suits the activities in question. A bit of each is not enough, but instead creates a grey zone with grey results, which is what we see for state-owned firms.

At the end of October, NOL announced: that losses continued in the third quarter with the company $23m in the red compared to a net profit of $20m a year earlier, hit by port congestion in Southern California.

“We see a slowdown in emerging markets, partly driven by a lower need for raw materials from China. Europe – it’s very slow growth, if any, at the moment, and there’s no reason to expect a big change here,” said Nils Andersen,Maersk’s chief executive.

Revenues for the third quarter were flat at $2.06bn. For the first nine months of 2014 NOL lost $174m, compared to a $61m profit in the same period last year that included a one time gain from the sale of its headquarters building.

NOL claimed cost savings of $290m so far this year but these had been “largely offset” by lower rates, lower volumes and increased costs for port congestion.

But about a week later, FT carried this report: Denmark’s largest company by sales reported better than expected profits in the third quarter and lifted its profit outlook for Maersk Line, its container shipping business.

Maersk has bucked the trend in a container shipping industry dogged by overcapacity, losses and weak demand. Thanks to aggressive cost cutting and lower use of fuel, Maersk Line is by far the most profitable container group.

Maersk Line estimates its operating margin, which was 8.2 per cent in the second quarter, was 8.5 percentage points higher than the average of its rivals.

It lifted it again in the third quarter, posting an operating margin of 10.5 per cent, and leading Maersk Line to boost its guidance for the year for net profits to more than $2bn compared with $1.5bn previously. Net profit in the third quarter rose by a quarter to $685m.

“The days of rapid growth in containerised trade are over. We have to be happy as an industry that we are still growing . . . But we can still make good business,” said Mr Andersen.

But Maersk is more than just a container shipping group as the conglomerate has sought to emphasise its other businesses in recent years including oil exploration and production, port terminals and drilling rigs.

….

AP Møller-Maersk lowered its forecast for growth in global trade as the owner of the world’s largest container shipping line said a slowdown in emerging markets and Europe was weighing on demand.

The Danish group, seen as a bellwether for global trade as it carries 15 per cent of all seaborne freight, said demand had slipped in the third quarter compared with the start of the year and was now expected to increase by 3-5 per cent this year, down from 4-5 per cent.

So having a scholar, ex-SAF general and ex Temasek MD hasn’t done any favours for NOL, or S’pore Inc. On his watch (to be fair in really bad weather,he crashed NOL onto the rocks. Still in charge despite that , he has repeadely failed to stop the water from coming in.

The red ink continues to flow with plans to sell its APL Logistics unit in a sale that could fetch at least US$1 billion (S$1.27 billion).

PM said recently said it is not about high salaries, but ones that are “realistic and correct”, in order to find the right people who are “most capable”, and “most trustworthy”.

Well, the new CEO of BG, a UK energy group, will earn 10 times his Statoil salary even though BG has only a fifth of the Norwegian company’s revenue. His replacement will not be paid substantially more. Even though listed, Statoil, is controlled by the Norwegian state.

Yet FT reports that as their pay is being cut by up to 60%, “The biggest difference between China and western countries is that we pursue the goal of getting rich together,” Fu Chengyu, head of the country’s largest refiner, told reporters. “If you want to earn big sums, you should not be an SOE executive.” (“SOE” is State Owned Enterprice i.e a GLC or TLC).

Need I say more?

“[M]oney is by far the least [important factor]” when choosing where to work. At this level it can’t be painful, right? The job we’re doing is a vocation. All of us like to be paid whatever is deemed competitive in the market, but it’s not the main driver.”” said the CEO of Switzerland’s third largest bank who has had to cut his pay by 12% because shareholders were unhappy.

Skip right to the end if you want to read the political and financial implications of this performance in relation to PM’s rally speech . No it’s not a rant against scholars.

According to DBS in early August, NOL reported a net loss of US$34.6m in 2Q13, and after adjusting for gains on sale of assets and realized gains on financial hedging instruments, results were largely in line with expectations of a US$64m net loss in 2Q13. – See more at: http://sbr.com.sg/shipping-marine/news/nol-suffered-us346m-losses-in-2q13#sthash.VZFIoR8g.dpuf. If truth be told, DBS, like other brokers got it dead wrong: NOL’s losses were 46% lower than expected. Only in stockbroking is such a discrepancy in line with expectations.

On 16th August, Maersk Line, the world’s biggest container shipper, reported a US$439m profit for the second quarter of the year, up from US$227m million a year earlier. Again this was unexpected by analysts, who tot it would only make half the amount. “Maersk Line has made strong and consistent progress and is now an industry leader in terms of profitability,” its CEO said.

It now expects earnings to be “significantly” more than last year’s US$461m rather than simply “above” them as it had stated before. NOL posted a half year net profit of US$41 million compared to a loss of US$371 million last year, and its CEO says “The Group’s results demonstrate that we are on target in our strategy to deliver a better performance through cost management. We will continue in our efforts to strengthen the company’s competitiveness for the long term.”

Note Maersk Line is run by a true blue shipping man*, while NOL is run by a scholar, and former defence chief, and ex-MD at Temasek. But Maersk is the largest container shipping co, while NOL is a distant 8th. It (and the Taiwanese) shippers decided in the late 1990s and early noughties not to fight Maesk for market share, instead focusing on profits. But profits were elusive for all because of overcapacity.

In yesterday’s rally speech, PM rightly warned that the increase in welfare and social spending has to be met by cuts in other bits of the Budget or by increased taxes. Defence is a Budget sacred cow, taking about 25% of the budget or 4ish% of S’pore’s GDP. Given NOL’s relative unperformance under the tenure of an-ex-defence chief, PM should direct Ng Eng Hen to look at the operational cost effectiveness of the SAF. Could S’pore more bang for a smaller buck?

–

*Another characteristic of any good CEO, is their ability to understand fully the often complex scope of their company’s operations.

It’s only number 8 (middle chart) in an industry where size matters (APL is NOL) and where there is serious overcapacity. It’s way behind the top 3 (all ang mohs). At one time, Evergreen (Taiwan) and NOL were right up there, challenging Maersk.

Another problem is the drop (and volatility) in freight rates.

Then there is slowing growth rates in shipping. Maersk’s CEO said in FT recently that Maersk will to adapt to annual growth seaborne container trade of 4 to 5% in the years ahead, compared with levels close to 10%.. For 2013, Maersk expects 0nly 2-4% growth. Maersk’s CEO says he is not going for market share but focusing on costs, something NOL has been doing for yonks.

With the fundamentals of the industry against it, having a CEO who is ex-scholar, ex-SAF chief, and ex-Temasek MD doesn’t help esp since NOL is a very efficient company.

Japan has agreed to write off more than US$3.7bn of debt owed by Burma and to resume development aid. The leaders of both countries also agreed to plan a special economic zone near Rangoon. This could give Japanese firms a head start in winning business in what is seen as one of Asia’s last frontier markets.

Hey could have been S’pore planing a SEZ with Burma! We are “old friends” of Burma. And GLCs and TLCs got experience of building biz parks in Vietnam and China. Come on Georgie Boy. Go broke deals between S’porean cos and Burmese ones and the government. Too comfortable, what with big fat pension? Or planning to reform PAP? Or planning to be president?

(Ya aware that three postings in row abt Northern ASEAN countries. But taz where the biz and investment opportunities are coming from in this region.)

Last week DBS Securities came out to say that costs in the private healthcare sector will go up as a result of the government’s plans to spend more on the public healthcare system. What FTs and foreign medical tourists have to pay more to get treated here? Can’t be right can it? This is not PAP policy which is FTs and foreigners first. Juz kidding.

Seriously this increased spending has implications for Parkway’s pending IPO. And for Raffles (see DBS report below) and the micro healthcare counters listed on SGX.

DBS VICKERS SECURITIES, March 7

The Singapore health minister unveiled a healthcare roadmap in Parliament yesterday, focusing on three goals: 1) Singaporeans to receive health care when needed; 2) healthcare services will be of good quality and effective; and 3) such services will be affordable to Singaporeans.

To achieve the above objectives, the government will be increasing hospital beds and manpower. These are: a) addition of 3,700 hospital beds by 2020; b) addition of 20,000 healthcare workers (+50 per cent) by 2020 and; c) lease capacity from private healthcare operators, namely Parkway East Hospital and Raffles Hospital, to treat subsidised patients, to ease the tight capacity in the short term.

Raising healthcare workers remuneration by 20 per cent. A new salary framework will be introduced to retain manpower in the public sector. On average, healthcare workers’ total compensation will increase by about 20 per cent by 2014*, with the first adjustments by April 2012. The measures to lease beds/capacity from private hospital operators will be positive in terms of operational utilisation, and could create some initial euphoria in share prices of private healthcare operators.

However, the financial metrics of how this will be done are still being ironed out. For example, patient charges, level of subsidies to be provided by the government, and the level of take-up rates (if based on patients’ preference), etc.

Furthermore, we believe there is a limit to the number of beds each operator is able to lease to the public sector given that this could compromise its service level if the public partnership saps too much resources.

Fight for manpower issues a longer term challenge: With the increase in public sector remuneration, the bar by private operators to attract healthcare workers is likely to be raised. This comes at a time when capacity is increasing in the private sector. These are Parkway’s Mt Elizabeth Novena Hospital, Singapore Health Partners’ Connexion One (at Farrer Park), Adam Road Hospital by Fortis Healthcare, and Raffles Medical Specialist Medical Centre at Bideford Road and 30 per cent increase in GFA at its hospital.

Essentially, both public and private healthcare sector will need additional manpower resources. Staff cost accounts for about 49 per cent of revenue at Raffles Medical.

Maintain hold on Raffles Medical. Despite some near-term boost from the public partnership to lease beds, the details are yet to be finalised and the financial impact is uncertain. Over the medium term, the challenge lies in managing costs, namely manpower.

As Raffles Medical is trading at about 22.2 times FY12F price-to- earnings (P/E), above its mean of 21 times and 60 per cent premium to the overall market, we believe the valuations have already factored in the positive outlook. Our target price stays at $2.48, based on 24 times FY12F P/E, a +0.5 standard deviation above mean.

*Bet you SingHealth charges will go up. PAP caught in vicious circle. Improve healthcare but have to charge more, and lose votes; or don’t recover costs and make a profit and become like West.

If anyone thinks that SPH’s publications have lost their clout because of new media, citing the bad reception that Pay Wayang, SMRTgate and PondingGate got from the public despite these publications spinning all the way for the White Side, the way that they covered DBS’s CloneGate shows their clout, even in the age of new media.

Customers were reassured, and the usual moaners were ignored by the public even though DBS is part of the Temasek Group (that S’poreans love to hate partly because its CEO is the wife of the PM), and the public and its customers often view DBS as dysfunctional.

SPH’s publications when combined with an effective public communications strategy is a fearsome tool.

DBS got its strategy right, moving “quickly to assure customers that their losses will be covered and investigations are underway. Experts were immediately put on air not to put a spin on why it’s not a big deal, but rather explain concisely how the scam probably occurred and is being carried out,” Words of the Cze. (If it had tried to weasel its way out, I for one would have asked how come the data theft could have occured at two high traffic ATMs, and why OCBC or UOB were not hit first? Why was DBS so dysfunctional?)

Don’t believe me? Reading ST (and MediaCorp’s freesheet) even I tot DBS was being generous in quickly compensating its customers until I read this in ST’s Forum. It reminded me (a trained lawyer who did a lot of banking legal work) that it was DBS that lost money, not the affected customers, “When someone deposits money with a bank, he is in effect lending money to it. Property rights to the money pass to the bank. In return, the bank owes its customer a debt. At that point, any money stolen or pilfered from the bank is its money, not its customer’s,” SMU academic. (BTW, I get the impression that a very impt KPI for SMU academics is how often they are quoted in the local MSM. One wonders if they have time to do other things.)

The PAP, SMRT and PUB did not get their public communications strategy right (see the above link on what PUB and SMRT did wrong) and SPH could not play its traditional constructive, nation-building role in helping out the White Side.

Coming back to DBS. When its CEO early last week ( his second anniversary at DBS) came out boasting of his achievements, I tot, “Nemesis” and “What bad news is he foreshadowing?”. Well Nemesis has struck and DBS has reacted very, very well to what could have been a major public relations fiasco. As to the bad news, “Watch and wait”.

But DBS is no longer dysfunctional. Could it be a turnaround situation, worth investing in? In Q3 2011, DBS’s return on equity was ahead of OCBC and UOB. BTW I own Haw Par shares which is a play on UOB.

The SGX’s CEO is reported by the FT to have said that the SGX’s planned takeover of ASX is its Plan B. He clarified that Plan A was organic growth by introducing new products. A few months ago he said if the ASX bid failed, SGX “had other fish to fry”. This implied to people like me that Plan A was the SGX takeover and Plan B was some other takeover.

The fact that he has “clarified” his earlier comments shows that he is panicking. See the previous post for the reason.

A A$7.3 billion ($7.1 billion) bid by the Singapore Exchange (SGXL.SI) to take over its Australian rival is faltering as the Australian government, the regulator and a key opposition party are all set to reject it, the Sydney Morning Herald said. Reuters article

The SMH story is extremely credible was it was written by the paper’s chief political correspondent.

This shows that SGX did not do its homework. Everyone who has a say in approving the bid seems against it. Reminder: the takeover needs the approval of the Foreign Investment Review Board, then the Treasurer (finance minister) and then Parliament (where the governing party does not a majority).

The only people in favour are the ASX board and the shareholders. They would wouldn’t they? The shareholders are being offered a huge premium.

SGX should cut its losses and move on. And sack is FT CEO who, I’ve been assured, is the moving force, behind the deal. It';s not the first time an FT CEO has messed up SGX. It had a previous FT CEO. But the in-between local-born CEO (now president at Temasek) doesn’t have a gd record too, S-Chips continued to be the primary source of new listings (numberswise) when he was CEO, even though evidence that there were problems with S-Chips was growing.

Global Logistics Properties has replied to a hack’s rant on why it should have disclosed GLP’s non-compete agreement with ProLogis in China and Japan in its prospectus. The GIC-linked company, which listed on SGX in October continues to contend that the “existence of the non-competition arrangement between the company and ProLogis is not material, and continues to be non-material to the ongoing business of the company”. The quote is from its reply to BT who first exposed this agreement.

I won’t go into the legal issues involved except to say but I find the reply inconsistent. BTW the links to the reply and rant may go walkabout in a few days’ time.

But what will SGX do? If it does nothing (putting the onus on the central bank: MAS approve prospectus leh), or investigates and then clears GLP, it will fuel Ozzies suspicions of the SGX takeover of ASX for two reasons. Read the rest of this entry »

This is the first Shariah-compliant reit listed on the Singapore exchange (SGX), and the world’s largest listed Shariah-compliant reit by total assets. Looks like analysts were wrong to expect Sabana to attract Middle Eastern investors saying there are not many such Shariah-compliant REITs in Asia ( M’sia has three, and this is all it seems). Either they got no money, or there are more attractive investments elsewhere or in more lucrative products.

At yesterday’s closing price of 0.97 its first yr projected yield is now slightly more than the 8.22% at the IPO price of price of 1.05.

But it trades only at a “peanuts” 2 cents above NAV of 0.99 in cash. But the properties to be injected in will only give an NAV of the 0.99.

For the time, being this infidel prefers AIMSAMP industrial reit which trades at a yield of 9.5% and an 18% discount to last published NAV. True gearing is at 35% versus Sabana’s 25%,: but the former has big Aussie insurer AMP as big brother, and the latter can only “borrow” from a limited number of “lenders” and via complicated structures. And I don’t have enough info to make judgements on its big brothers.

BTW looks like Temasek’s Mapletree industrial reit has beaten this Shariah-compliant industrial reit performance-wise in IPO terms. They IPOed within weeks of each other recently.

Moral of the tale for pious folk of any religion: God may rule in heaven but on SGX, investors prefer to invest in a Temasek-linked reit, rather than a religious-compliant reit. The blasphemous (not I) may want to shout, “Harry rules OK” or “In S’pore, God takes advice from MightyMind”.

So said a senior American official, referring to a balls-up* in Afghanistan which showed the failure of British, US and Afghan intelligence.

“We have good growth; we have good plans and that is what we should be going into the election for – to mobilise people to support these plans and support the team which has brought this growth to them,” the PM said a few days ago.

But he forgot that there were two serious security goof-ups which proves twice over that “Something this stupid … requires teamwork”.

Mas Selamat climbed out of a detention centre, avoided capture despite taking refuge in his brother’s flat, and floated out of S’pore. Now anyone can do the first undetected, but the other two? And what odds all three consecutively? And if he can float out undetected, Pakis can float in, undetected, with explosives and illegal drugs.

And we had the SMRT depot break-in, that went undetected for days Given the threat of terrorism, S’poreans (and the authorities) were surprised that SMRT’s security was so lax. SMRT not an ordinary commercial company, it is also a GLC and TLC.

And then there were the PR damage limitation exercises that resulted from these incidents. They were so inept proving that “Something this stupid … requires teamwork” comes. We had the CEO of SMRT (an FT from M’sia) blaming the public, and MPs being told by the Home Affairs minister that that Mas Selamat could go undetected in the flat “was not a security lapse’ and that hundreds were probed. What weed were they smoking? Or drug they were taking? Or what alcohol were they drinkng? Or what combination of these? Read the rest of this entry »

The ex-head of the civil service and now chairman of the Public Service Commission showed he “got it” when he said at a recent speech in the US to S’pore scholars: If we strive to be world-class, we will be judged by world-class standards. If we say that we have one of the best governments in the world, the public will expect it to solve virtually any problem Singapore faces.

Taz correct.

But he showed he didn’t “get it” when he went on: Some of our citizens are now beginning to expect the government to do the impossible. Many citizens are now less prepared to give the government room to make mistakes and are less forgiving and more demanding. They tend to regard explanations as excuses. Take the recent floods. To some Singaporeans, saying that floods are natural disasters and Singapore cannot be flood-free, sounds like a cop out. Every time something goes wrong in Singapore, citizens ask: “If our public servants and Ministers are so smart and paid so well, why can’t they prevent the problem from occurring, or solve it for good after it occurs?”

He is assuming that the “explanations” given explained what had happened. He should relook this assumption.

Juz look at some of the recent “explanations” that have been given for goof-ups or incidents that caused public inconvenience. Are we wrong in thinking sume people were trying to avoid responsibility?

As to the floods, I could not understand the minister’s and senior officials’ explanations. I only “got it” when, on an inside page of ST, it was reported that more rain had fallen in a few hours than it had for days on end i.e. it was very, very heavy rainfall in a very short space of time. Point taken. But this explanation by a junior official was buried deep inside ST, and I’m sure many would have missed reading it. The front page “explanations” failed to give this fact, or where they did, this fact was lost in the smoke of hot air.

The problem is that the “explanations” given often ignore the question, assume that S’poreans are morons or that we are educated, and refuse to admit that mistakes were made. Perhaps PSC should run courses to train scholars to be less arrogant; to admit to making mistakes; and to write in simple, believable prose? One gets the impression that ministers and civil servants attend courses where they are taught not to ever admit making a mistake; and to avoid answering questions. Read the rest of this entry »

Did you know that when the government sells state land to property developers, the money flows into the reserves (which are managed by our SWFs) and not into the Consolidated Fund like other government income? This is uniquely S’porean. Other countries credit land sales to income. The government’s rationale is that as state land is an asset, sale proceeds should not be credited to income but to capital (reserves). Makes sense, but that’s not how other governments account for land sales: even HK, and no-one can say that HK is badly run or profligate.

So when HDB “buys” land from the government it is adding to the reserves. As it and government claim that the price an apartment is sold does not reflect this price, they claim HDB makes a loss. But whatever it is (I leave it to others to dispute this claim), the reserves are increased.

So in addition to the surpluses (generated by thriftiness or meanness according to who is talking) and (indirectly via a circuitous route) our CPF monies https://atans1.wordpress.com/2010/11/02/how-we-fund-our-swfs/, sales of state land also contribute to the reserves that GIC, Temasek and the central bank manage.

There was one financial year ending March 2008 ( I think), where the government injected abt S$10 billion into Temasek. This sum was more or less equal to the amount that the government took in property sales for that year. Easy come, easy go as in the following yr Temasek could have lost as much as US$4.6bn (in 2009 March this would have been S$7bn) on Merrill Lynch. And there was the much smaller loss on Barclays (800m sterling?, then worth abt 1.7bn S$). Err not much change left over from injection: only S$1.3bn, “peanuts” as Mrs GCT might have put it, except she didn’t.

So this combination of surpluses, CPF money (indirectly via a circuitous route), and state land sale proceeds, have resulted in our SWFs having 179.5% more in assets than S’pore’s 2009 estimated GDP.

The Norwegian’s much larger fund (US$471bn) is only 23% more than Norway’s GDP. Abu Dhabi’s fund (at US$627bn) is 627% of its GDP. For those interested, I used FT’s US$248bn for GIC and US$133bn for Temasek. As to GDP numbers, I used CIA Fact Book as reference. (BTW, I’ve not taken into account the amt of foreign reserves that MAS manages because I could be double counting if I do. For the record, MAS says its reserves as at end 2009 are US$188bn).

So we got plenty of $ to make housing more affordable*. And there is no need to change constitution, or cut other expenditure. Juz change the accounting rules on land sales.

S’pore Inc’s board of directors regularly rant at the US practice of allowing the media to play a major role in the governance of the US, the world’s hegemon. But funnily this board makes sure S’pore Inc follows American practice when it comes to the power of the board and management of corporations vis-a-vis its citizens i.e. shareholders.

Unlike the British practice in the law governing companies (which S’pore follows in company law), the US practice makes it difficult to remove directors and challenge or overturn management decisions. Shareholders often have only an advisory role in the company they own. If they are not happy with the board or management, they can quit the company (sell the shares) if company is listed.

Doesn’t this sound like the corporate governance of S’pore Inc? Not happy, be a quitter. You can’t change the board or management.

The only realistic outcome of the coming general election is for the board and management to feel the anger or dis-satisfaction of the shareholders, if these feelings are real and not just astroturfing by anonymous Internet posters.

Either the Reform Party or the SDP (I give up on WP and the Chiams, and NSP is too small, and asking RP and SDP to cooperate may be unrealistic) should try to work on an index to show how badly S’poreans have done since 19991 (when present SM became PM) and 2004 (when LHL became PM). Remember Ronald Reagan became president by asking if Americans were better-off than when his opponent became president. No hope of change here, but such an index can help people decide if they are angry or dis-satisfied. And whether they want to send a message.

Seriously, we need some hard numbers because as the Polish philosopher Leszek Kolakowski said: there was never a shortage of arguments to support any doctrine one wanted to believe in for whatever reasons. He called this insight the law of the infinite cornucopia.

Interestingly S’pore Inc practices “betterest” and “baddest” corporate governance at the same time.

When it comes to CEO succession, we follow best corporate practice (and that of North Korea, China, and the Roman Catholic Church).

There is gd succession planning for the post of PM (CEO), and cabinet posts. People are talent spotted and groomed and tested. Some have remained as junior ministers, while now and then a cabinet minister is sent packing. Though sadly such best practice is not infallible: it led to the hubby of Peanuts Choo becoming PM, resulting in the “lost 14 years”, when S’pore lost its way. But to the fair to the system, at that time an Indian was thought by someone as not acceptable to the Chinese majority, while another candidate didn’t want the job. So what to do?

But we have a rotten practice when it comes to ex-CEOs. In any well run listco, does the ex-CEO retain his place on the board of directors? The answer is no, not unless he also happens to be the controlling shareholder.

The presence of the ex-CEO will be taken as a sign of no-confidence in the new CEO. Or that the new CEO is weak. Or both. Or that it is all wayang kulit. The ex-CEO is the puppet master. and the new CEO is his puppet.

In the cabinet (S’pore Inc’s board), we have two-ex PMs and now one ex-DPM. Err what does this say abt the PM? Or what the ex-PMs think about him?

If S’pore Inc were listed in London or NY, what would the shareholders have done?

Funnily this worst practice is not practised at S’pore Inc’s lower levels: e.g. in the admin service and SAF. When senior officers make way for new fresh blood, the former don’t hang around in posts where they can monitor their successors.They are given new posts: like a general becoming a investment director at Temasek.

— unhappiness with or criticism of any policy is met with “kind to be cruel”, “it contributes to economic growth stupid”, “don’t be ungrateful”, anger or hostility;

— govmin goof-up is met with spin* and then by “move on” if the spin is not believed; and

— stayer who raises questions abt national identity is met with hostility,

is this govmin, a government to look after our lives like a guardian or a trustee?.

Is S’pore a place whose political system [ ] is fair, honest, accountable, and stable … which can produce an honest and effective government; and which can deliver the kind of buzz which Singaporeans want for their country?

Only the PSC chairman gets it: If we strive to be world-class, we will be judged by world-class standards. If we say that we have one of the best governments in the world, the public will expect it to solve virtually any problem Singapore faces. Some of our citizens are now beginning to expect the government to do the impossible. Many citizens are now less prepared to give the government room to make mistakes and are less forgiving and more demanding. They tend to regard explanations as excuses.

If the ruling party doesn’t get it (and talk of a military coup if there is a freak election result), and we can’t change the system, isn’t it time for us to be rational abt the value of being S’porean, and “move on”?

I’ve “moved on” mentally. The antics of the PAP (esp that of SM), and two leading Opposition parties, the WP and Chiams, annoy and sadden me . The WP thinks passivity is the answer, while the Chiams are saying, “We run the SPP and SDA”.

Feel free to call me a quitter-in-residence. Hotel room and service gd here, even if I can find better value overseas.

If the daughter of SM and “peanuts” Choo can “move on”, why can’t or don’t you?

This piece is an attempt* to answer,”If Singaporeans are not “hard-driving and hard-striving”, where did GIC and Temasek get so much money to lose?”: a posting on a Temasek Review article in late 2009.

The answer parroted mindlessly by the government is that government budget surpluses mean that GIC and Temasek get money to invest with.

A more detailed explanation has to start with how the surpluses arise.

As about 43% of the working population don’t pay income tax, and VAT and other taxes are relatively low: one way the surpluses are generated is by a government being thrifty (government’s view) or mean (view of many netizens).

Economists in the private sector, and the Reform Party (the sec-gen was once an economist and he has a first-class degree from Cambridge) have argued that rather than accumulate large surpluses that are then invested abroad, the government should spend more building up Singapore’s human capital. By spending more on things like education, healthcare and consumer protection, the returns generated will be better than the returns on overseas investments.

This is an argument that has excellent academic credentials. China is often asked by eminent economists ,”Why do you export so much when you, in return, use the surplus lend to the Americans so that they can buy more from you?” The economists advise that China should invest more locally.

The government’s view is that Singapore needs the reserves as an emergency fund should things go badly wrong. The late Dr Goh Keng Swee talked of spending the reserves in a recession (as has happened recently). Dr Goh and others could also have quoted the example of Kuwait. When Kuwait was invaded by Iraq, the reserves were used to help pay for the war. And afterwards for the reconstruction of the country. They could also have cited Iceland and Dubai as countries that got into trouble because they ran out of $, when they could not borrow any more.

The second reason why surpluses occur is that our CPF monies are invested in special government bonds. The $ from the bonds flow into the government’s Consolidated Fund together with revenues from taxes etc. All government expenses are paid out from this fund. If there is a surplus (as there usually because the government is thrifty or mean depending on who is doing the talking) part of that surplus can go to GIC and Temasek. The government argues that because all the monies in the fund is fungible (cannot be separated), one is wrong to argue that CPF monies are invested abroad.

Technically and legally the government is correct, but so what is the retort? The financial effect (though not the legal consequences) is the same as if our CPF monies are directly invested abroad.

And these special bonds are the reason why S’pore is up there on a list that the local media does not ever publicise. S’pore has the 8th highest public debt to GDP ration (113.10%) in the world. Greece is 7th with 113.40. Other countries on the list above us are Zimbabwe (champion), Japan (second), Lebanon and Italy. Iceland is 9th (106.7) while Ireland is at 36 (57.7).

(Aside, could this high debt to GDP ratio be the reason why the govmin wants to force-feed GDP growth through immigration? I may explore this issue in future and I hope RP will explore the issue as something the electorate should be educated upon.)

Singapore is unique among the countries with the largest sovereign wealth funds. The other SWFs are effectively funded from oil revenues. In the case of Singapore, it could be reasonably argued, by government critics, that the funding results from the “hard-driving and hard-striving” Singaporeans who are forced to save and lend the money to the government; and from less than optimal government spending.

So the quote at the beginning of this piece has elements of the truth. And worse: one could reasonably argue that the government makes something for itself from “hard-driving and hard-striving” S’poreans. One noted local economist has said that the government is effectively pocketing the difference between the returns it gets from investing abroad and the returns it pays on our CPF accounts: a carry trade arbitrage. Borrow low and invest for higher returns.

*What with an election coming, I tot I should revise (and repost) a piece I did in December last year. The revision has been pretty extensive.